Gold is expected to coast to price levels of Rs 16,000 per 10gm after last week’s stretch of record-making highs, as the heavy safe-haven buying overseas showed the peak has yet to come, analysts and traders said.
But prohibitive prices might also crimp retail demand in the gold crazy country, bruising imports further, traders and an analyst said. “If the rupee continues to trade around 48.50-48.70 and investment continues to flow into bullion, there are fair chances for India’s gold prices spiking to at least Rs 16,000 by next couple of months,” said Pradeep Unni, senior research analyst, Richcomm Global Services, Dubai.
A median forecast of a Reuters poll of 14 banks and brokerages in early January saw gold at Rs 12,900 per 10 gm by the end of the quarter to March. But the global economic downturn is resetting prices of the world’s favourite safe haven bet. “The price-level of Rs 16,000 would be a possibility in the next two months’ time,” said Amrut Deshmukh, senior technical analyst, Way 2 Wealth Securities, Mumbai. Brokerage Anand Rathi, one of the respondents in the poll, sees gold touching Rs 15,500 by March-end.
The benchmark April contract on the Multi Commodity Exchange (MCX) was 0.55% higher at Rs 14,709 per 10 gm at 3.51 pm, after hitting an all-time high of Rs 14,824 on February 12. The contract has gained 7.1% so far in 2009 as investors sought safety in the precious metal amid a deepening global recession and financial turmoil. In 2008, gold soared to its year-high of Rs 14,320, up 35.1% from its 2007 close, before falling to Rs 11,290 on October 24. Gold has gained more than two times since 2004.
“If any investor is long, then it is advisable for him to book profits at Rs 16,000 in a couple of months,” Deshmukh added. “Gold may touch Rs 16,000 looking at the current trend and the way things are on the economic front,” said Pinakin Vyaas, chief manager - treasury, IndusInd Bank, Mumbai, adding, “but may not sustain at these levels.”
Demand might also recoil if gold does see never-before-levels, said traders and analysts. “Such high prices may result in severe shelving of retail demand especially under the current economic conditions,” said Richcomm’s Unni.
Purchases are to fall for the second month in a row with no imports so far in February because of high prices, the head of a trade body said. “We have not witnessed much physical movement even during the wedding season either due to cost or low purchasing power,” said IndusInd’s Vyaas. (Source: Reuters)
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